Since 1995，targeting to establish modern enterprise system and to strengthen the company, with reference to the socialism’s market economy, JISCO actively detached the auxiliary industries, reformed the regime of labor, remuneration and personnel management, updated the management system and adjusted the organization structure. As a result, the company has been promoted a lot.

A、To build up system of parent-daughter company interrelationship and separate the main industry from the auxiliary ones. The parent-daughter company interrelationship is the most fundamental management system on the basis of assets links. The characteristics of the subsidiary (daughter) companies are as follows: they are mainly involved into the social activity and its product has nothing to do with Iron & steel; they normally play an inferior role of assisting in JISCO’s main operation. By merging and transference, JISCO has changed more than 20 auxiliary activities into branch and subsidiary companies, e.g., refractory material, garden keeping, real estate, mechanical manufacture, electrical repair/manufacture, cement product, vehicle transportation, etc. These companies will run the business all on its own. In order to regulate these companies, JISCO issued《regulations for JISCO subsidiary company》and《regulations for JISCO branch company》. The regulations require that, both the subsidiary company and branch company shall pay JISCO for using the JISCO’s assets, complete the mandatory sub-plan stipulated by JISCO Group, follow the financial rules of JISCO in respect of depreciation, administration & commissioning fees, assets value maintenance & increase, etc. On the contrary, JISCO will conduct cost-effectiveness evaluation and financial audit against those companies. According to the regulations, the bonus will be exempted or lessened provided that losses of the same period occurred to these companies.

B、Modernize management system and consummate operation mechanism. In the principle of “optimizing the organization, employees and distribution”, JISCO accordingly reformed the relevant policies, and consequently the post and treatment of each employee became flexibly changeable. The main-activity divisions are induced to cut down employees, under the instructions of Group’s 18 specific rules, e.g., finalize the number and duty of the posts, suspend or terminate the individual employment contract in feasible ways, etc. JISCO has dramatically made the reform for the company organization to fit it into the “flat” and “dumbbell-shaped” management mode. By means of shutdown, combination, reducing and transforming, all the division hierarchy has been upgraded; especially the old three-level structure (group company, plants and shops) has been changed into new two-level structure (group company and production processes). To achieve this goal, Production commanding center and Hongtai international trade company were established in 2003 resp. 2004.

C、To expand the active assets and enliven the auxiliary activities. JISCO Hongxing listed company was founded based on the best assets and up-to-date equipment of JISCO, and invested by JISCO and four other companies in the same province issuing Share A to the public. Having been listed on the Shanghai stock exchange since 2000, JISCO Hongxing listed company’s main business income increased from RMB 2.073 billion to 5.892 billion Yuan, the net profit from RMB 132 million to 6.04 Yuan and the total assets from RMB 1.891 billion to 3.818 billion Yuan in the last four years; those three are respectively increased by 184%, 358%, 102%. In addition to the endeavor of enlarging the active assets, JISCO attempted innovation in various ways, for example, detaching the auxiliary activities from the iron & steel activity to let them assume sole responsibility for its the losses and profits.

D、Rigid reform and flexible cutdown. JISCO is a senior enterprise with 40 years history, and there are a lot of redundant employees. The flexible cutdown means letting as less unemployed staff flow into the society as possible from the point of view of society stability. Based on this principle, JISCO attempted many ways of reduction in order to minimize laid off employee, such as retirement, internal withdrawal, long vacation and so on. Up to 2001, JISCO has reduced 23000 staff, out of which, the off-post employees (including: internal withdrawal, long-vacation women, laid off employee, employee whose salary is stopped though registration is kept, ill and disabled employee and son on) have reached 7400 person. In order to realize the reemployment of the laid off employee, JISCO has seek for opportunities, and as a result 2200 person has been reemployed again.

E. Relief enterprise burden by socialization. JISCO, like other state owned large-scale enterprise, undertakes huge society function during planning economy system period. In the light of “earlier innovation, earlier profit” and “earlier separation, earlier relief”, JISCO made prudent measures and step-by-step relieved enterprise burden. The reform started from housing and medical system as early as 1991. The employee college, technical secondary school and metallurgical technology school, which were previously managed by JISCO, now have been combined to one school named as “JISCO employee training center”. Liberal education management committee, under the control of JISCO, manages the elementary schools and middle schools, and the expense is lump-sum contracted.

F. Standardize the management structure of legal person.To meet the requirement of modern enterprise system and those reflected in the instructions of the provincial government, JISCO is on the progress of adjusting the administrative structure for chairman of board, board of directors, high management and board of visitors. The state owned enterprise used to appoint one person for both chairman of the board and the president. However, this system should be changed in the manner that, the chairman of board and the president are nominated separately; Chairman of board focus only on legal person responsibility and enterprise macro operation; The youthful person with enough theory and practical experience as well as innovation consciousness should be chosen and appointed as JISCO president; Clarify the responsibility of each department and the relationship among those departments; standardize the operation of JISCO. Adding to it, the whole management hierarchy of JISCO will be cleared up and standardized between the divisions. According to the requirement of Gansu provincial government and CCP committee, all the stated owned enterprise in Gansu province should complete the reform of property right in three years, and JISCO is listed among the enterprises of first group performing the system reform, and now JISCO is doing the preparation works for such reform. On one hand, JISCO send the employees from organized the economy research center, enterprise management department, labor and remuneration department and financial department, to attend the relevant training course and research conferences, which were organized by the state ministry. JISCO also invited expert and scholar to teach its employees about the ideas of system reform. On the other hand, JISCO is busy drafting the solution for the coming system reform.